Legal Victory: HC Revokes ITC Denial, Grants Taxpayers Another Chance

• Writ Petition Filed :

- A writ petition has been filed challenging Exhibit P1 assessment order and Exhibit P2 recovery notice.

- Input tax credit of Rs. 1,10,769 (comprising SGST and CGST) was denied due to a mismatch between GSTR 2A and GSTR 3B.

• Assessee's Response :

- In response to the show cause notice, the petitioner/assessee explained that they claimed input tax based on valid invoices in GSTR-3B.

- They noted that some suppliers faced technical issues when uploading data in GSTR-1, resulting in '0' tax items.

• Unsatisfactory Reply :

- The reply provided by the petitioner/assessee was not deemed convincing to drop the proceedings.

- GST DRC-01A notice was issued, followed by a Section 73 notice.

- Exhibit P1 order was passed, including the denied input tax, interest, and penalty, leading to the issuance of Exhibit P2 recovery notice.

• Petitioner's Counsel Argument :

- The petitioner's counsel argued that the supplier/dealer eventually paid the tax collected from the petitioner, albeit with some delay.

- They emphasized that there was no difference between GSTR 3B and GSTR 2A.

- The petitioner was willing to prove the correctness of the claimed input tax credit given an opportunity.

• Court Precedent :

- The petitioner's counsel referenced a previous court judgment dated 12-9-2023 (W.P(C).No.29769 of 2023) that emphasized that denial of input tax credit solely due to a GSTR-2A and GSTR-3B difference should not be valid if the taxpayer can provide evidence of having paid the tax to the supplier/dealer.

• Explanation of the Case :

- The petitioner's counsel argued that this case was not about the non-payment of tax by the supplier/dealer.

- They contended that the tax collected by the supplier/dealer from the petitioner, for which input tax credit was claimed, was indeed reflected in GSTR 2A, even if with some delay.

• Consideration of the Case :

- Given the petitioner's claim that the tax for which input tax credit was denied is reflected in Form GSTR 2A, the denial of the petitioner's input tax credit in Exhibit P1 order does not seem justified.

• Opportunity Granted :

- The petitioner is granted one opportunity to appear before the Assessing authority within seven days.

- They should bring all relevant documents with them.

- If the Assessing authority is satisfied, the petitioner's claim for input tax credit denied by Exhibit P1 will be granted, and a revised order will be issued.

AUTHORITY FOR ADVANCE RULINGS, TELANGANA Vaishnaoi Infratech and Developers (P.) Ltd.